Jinli Group Holdings Ltd (金麗集團控股), an apparel maker focused on the Chinese market, yesterday said its new plant in China’s Fujian Province is to start producing facial masks next quarter, in an effort to branch out from its core clothing business.
“The facility is expected to manufacture 28 million facial masks per year,” a Jinli investor relations official said by telephone.
The official said that Jinli has been selling skincare products in Taiwan since the third quarter of last year, in a bid to test the waters in the rapidly growing cosmetics market.
“We hope to build a strong brand image of Taiwanese products among Chinese customers,” he said.
The company said that it would launch low-priced facial masks targeting women younger than 30 in the Chinese market.
In an attempt to boost sales of its skincare goods in the Chinese market, the company plans to set up corners at its brick-and-mortar stores specifically for the products and utilize e-commerce platforms — including WeChat (微信), the largest instant messaging platform in China — to sell the goods, the firm said.
Jinli, which runs two medium-priced casual apparel and shoe brands, sells its products through nearly 700 outlets in 17 Chinese provinces, mainly in third and fourth-tier cities.
Beauty products are expected to be a future primary profit contributor, the apparel maker said, citing higher gross margins and lower labor costs in the manufacturing process.
Gross margin of cosmetics products could reach more than 60 percent, it added.
As for its mid-term goals, Jinli has set a target to achieve 5 percent revenue contribution from cosmetics products in the next three years.
The company was last quarter met with intense competition in China, reporting that profit slumped 38.7 percent from NT$242.1 million to NT$148.5 million (US$8.02 million to US$4.92 million), with earnings per share falling from NT$1.45 to NT$0.87.
Sales in the period also decreased 18.8 percent annually from NT$1.27 billion to NT$1.03 billion, while gross margin fell from 35.25 percent to 33.69 percent and operating margin dropped from 26.68 percent to 23.74 percent in the same period last year, a filing with the Taiwan Stock Exchange showed.
The firm provided a relatively conservative outlook for the rest of this year, due to continued harsh competition in China’s apparel market, with the firm’s cosmetics products unlikely to contribute significant revenue in the near term.
The firm is in talks with its distributors in the Chinese market to adjust distribution contracts in a bid to maintain its operational costs in the market, Jinli said, declining to elaborate on contract details.
Jinli shares yesterday edged up 0.3 percent to close at NT$34.75 in Taipei trading, underperforming the broader market, which gained 0.37 percent.
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